Algorand Foundation reveals $35 million exposure in Hodlnaut

Hodlnaut suspended withdrawals back in August and is holding $35 million of Algorand's assets.
Algorand Foundation reveals $35 million exposure in Hodlnaut

Algorand Foundation – the organization behind PoS blockchain protocol Algorand – recently announced that it has a $35 million exposure in troubled crypto lending and borrowing platform Hodlnaut. 

The Singapore-based crypto lender was placed under interim judicial management (IJM) on Aug 29, three weeks after it suspended withdrawals for its customers due to unfavorable market conditions caused primarily by the TerraLuna crash

Companies that are under stress because of mismanagement are placed under IJM, which assists them through the temporary blip and provides protection from third-party legal proceedings.

Less than 3%

According to Alogrand, the $35 million exposure represents less than 3% of its total assets and is a surplus to the working capital requirements. Hence, it doesn’t anticipate any liquidity or operational challenges. 

Most of the funds were locked in short-term deposits, and after Hodlnaut froze withdrawals, the investments became inaccessible. 

“As part of the Foundation’s mission, from time to time, we invest a portion of our surplus treasury capital to generate yield for the purpose of Algorand ecosystem development, and these funds were invested for that purpose,” said the foundation in a news piece released on the official website. 

Meanwhile, the blockchain-focused organization is working on pursuing possible legal remedies to ensure maximum asset recovery.

The Singapore High Court appointed two of Algorand’s nominees “to act as the interim judicial managers of Hodlnaut, with the aim that they identify, preserve, and protect Hodlnaut’s assets until further court action begins.”

More exposure

The Algorand Foundation also had exposure in the bankrupt crypto hedge fund Three Arrows Capital (3AC). The organization had entered a one-off OTC trade with 3AC, but it claimed that the hedge fund violated certain agreement terms. 

The current status of the transaction is unknown. 

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About the Author
Himan Mohapatra
Himan Mohapatra
Himan Mohapatra is a crypto and NFT focused writer for Coinmash. He is passionate about finance and disruptive tech, such as blockchain. One can find him playing Valorant or FIFA when away from his desk.